BELEAGUERED Spain will this week attempt to borrow up to e5 billion (£4.1 billion) from international debt markets following the near-failure of an auction of national bonds earlier this month.

Although Madrid has yet to inform the market as to how much it wants to raise in debt financing, it is understood that it will look to sell e3 billion to e5 billion of bonds, or IOUs, via a further auction on Thursday.

Spain’s woes mean the financial markets are set for another volatile week. On Friday European markets faced increased eurozone jitters after it emerged that Spanish banks borrowed a record e316.3 billion from the European Central Bank in March.

As global traders continued to punish the nation’s stocks and bonds the country’s prime minister, Mariano Rajoy, said the eurozone is not equipped to bail out Spain.

Spain’s woes mean the financial markets are set for another volatile week

Yesterday international bond market investors said that given the disappointment of its last bond auction Madrid is putting pressure on them and big investment banks that deal in euro government bonds to make sure that it is more successful this time around. Spain only managed to raise e2.6 billion from the bond auction it held earlier this month, which was its first since the centre-right government of Rajoy (pictured below) unveiled its austerity budget.

The sum raised was the bare minimum Madrid required and the government had to pay an interest rate of 5.3 per cent to get the bonds away, which was taken as a sign that investors are demanding a high premium to compensate them for the increased risk of defaults.

On Wednesday the European Commission will announce which “priority measures” it wants implemented by Greece to help kick-start its ailing economy.

It wants the Greek government to drastically cut its spending in several areas, tackle the black economy and widespread tax avoidance, in addition to reforming its labour market and scaling back its healthcare system.

The EC also says it will increase the amount of help it will provide Greece to help it make the legal and administrative changes necessary to help it return to growth.